Workshops on Shareholder Value and Corporate Social Responsibility

The Financial Times journalist Gillian Tett (2010), draws on the insights of her Cambridge doctorate in Anthropology when she argues that our capitalism is run by technocratic elites, operating in silos amidst "social silence", as outsiders lack the knowledge to understand, discuss or restrain the specialists who have narrow and arcane knowledge.

Sociologists of finance like Aeron Davis or agencies like the IMF in its autopsy report on the crisis, both highlight and echo the view that problems are often caused by the group think of insider experts, who make up their own realities and do not communicate with others. In this respect, problems with credit derivatives in the financial markets are not unlike those relating to BP's deepwater drilling in the Gulf of Mexico.

We seek to address this problem of silo knowledge in several ways. Firstly, we will encourage interactive dialogue between groups, like senior managers and academics, who more typically give directions or lecture each other. Secondly, we will encourage broader ranging conversations between those, like senior managers and consultants, who typically talk narrowly about specific firm issues.

Specifically, the two projected workshops will encourage round table conversation between a group of some 20 senior managers from blue chip European companies and half a dozen Hay Group consultants who specialise in organizational design and strategy implementation, and a similar number of senior academics from the CRESC research centre who have worked on banking reform, rebalancing the economy and manufacturing. We intend to invite managers from major European companies in a variety of sectors where Hay has clients or friendly network contacts. The companies will include; Aviva Investors, Standard Life, Tesco, Xstrata, Whitbread, Anglo American, Burberry, Tullow Oil, Astra-Zeneca, National Grid, Prudential, Hays PLC (no relation), ITV and British Land.

This is timely because we are in the middle of the second phase of the economic crisis. The macro issues occupy the headlines, when the threat of sovereign default has the potential to create a second banking crisis. But, behind many of these macro problems are micro/firm level and meso/sectoral questions about issues like, reward within the firm and the consequences of firm level pursuit of shareholder value.

Hay and CRESC have chosen to focus the workshops dialogue on the familiar issues of; shareholder value and corporate social responsibility, because these issues can enable and sustain a conversation about who makes, and who gets value.

Hay Group and CRESC will use a mixture of briefing notes, short presentations, empirical exhibits and company and sector cases to stimulate discussion of specific questions including; Does shareholder value provide a guide to action for managers? What are the rights and responsibilities of owners in a world of managed fund investment? What can the financialised firm deliver by way of corporate social responsibility?

The sessions will thus aim to encourage rethinking about the unintended consequences of action at individual firm level and of meso or sectoral constraints and possibilities. Participants will be encouraged to develop answers and to challenge their assumptions about whether (and how) managers can make a difference to firm level results and acknowledge consequences at a distance in time, or down the chain.

We hope thereby, to reframe some of the knowledge of each of the expert groups involved, and to find some individual enthusiasts who will promote new network relations and projects after the workshops. CRESC and Hay Group will write up some of their case material, and the discussion which resulted, into a popular report. This post workshop report will provide the basis for broader dissemination because; it will raise broad public interest about the limits of the point concepts of value, which ignore sustainability along the chain and over time.

If we aim to break down silos, we do not aim for the kind of success which Lew Platt dreamt of when he famously said, "If HP knew what HP knows, we would be three times as profitable." But we aim to deliver relevant insights and build network relations which would enthuse some participants to work together afterwards, on issues relevant to their organisations.

As already noted, with CRESC academics, the aim is one new knowledge exchange partnership with a leading corporate. With the Hay Group Consultants, on the demand side, the aim is to persuade two or three corporates; (a) to choose Hay consulting for the first time or (b) to buy a broader range of offerings on organisational success from Hay. On the supply side, the aim is to add some insights which would help Hay differentiate its offerings in a world where, many products from the major consultancies are commoditised, and would help sustain Hay's commitment to a model of intelligent consultancy which, offers challenging and relevant questions rather than endorses whatever the client wants to do.

We recognise the ESRC prioritises the importance of building continuing relations between academic researchers and for profit corporates but, do not want to over promise on this count. On management practice, we would not pretend to be teaching best practice on issues like supply chain management. But, we would argue that management needs to consider broader issues of distribution through job creation inside and outside the national economy, the politics of supply chain power for producers and the role of stock market pressure for growth and returns. The result should be clearer understanding of unintended consequences and chain issues arising from success at one point; and we can test reaction with a questionnaire. We cannot predict how corporate managers will respond but, we would expect them to be drawn into closer relations with CRESC academics and Hay consultants, so that the measures of success for these two groups would capture success with managers. We would also emphasise that, what we are doing in the workshops is new and untried so that there is some risk of failing to meet objectives. In which case, our final report would reflect on the conditions of unsuccess and how we (or others) might do things differently another time.

The media gives us another pathway to a broader and more diffuse impact on academics and non academics. Since autumn 2009, CRESC has produced a series of high profile public interest reports on banking reform, on London as a city state, on rebalancing manufacturing and also on train building (see www.cresc.ac.uk). This has given us unique media contacts, because the list of national journalists who know our work and who have written enthusiastically about CRESC reports includes; Larry Elliot and Aditya Chakrabortty of the Guardian, Heather Stewart of the Observer, Tony Jackson of the Financial Times, Ruth Sunderland and Alex Brummer of the Daily Mail and Simon Caulkin (formerly of the Observer).

We would aim to interest journalists by writing up the empirical exhibits and the roundtable discussion in a bright and lively 5-7000 word report, in the style of previous CRESC public interest reports. If we can convey a sense of novelty, then the media will persuade newspaper readers to download from the CRESC website. And this gives us another pathway to impact, as we can then make contact with other academic and non academic groups, as we have been doing with CRESC work on manufacturing and public procurement. Through this outer circle, we can begin to put together interesting coalitions for change, as we have been doing already with our work on train building where there has been rapid change in public thinking about procurement.